Text
Matt Tumbleson was frustrated with phone calls and endless hold times, the oldest complaint in customer service. Before starting Text, he had been the first creative and marketing director of Seamless, which is now Grubhub, and that experience convinced him that customers were significantly happier using SMS than other channels.
Matt started using the product with a couple of clients he was connected to, and officially launched in 2013. He put a lot of his own equity into the company for the first year, about $300,000. Early on he wanted to price at $99 a month, but investors pushed him to go after larger enterprises with a higher price point. Year one revenue was roughly $10,000 to $12,000.
Once investors got involved, the company focused on scaling. Text raised a seed round of about $2.5 million and built an inside sales team. Each new salesperson brought in two or three large enterprise clients a month. Customers were placed on annual contracts, with a typical deal starting below $1,000 a month and being adjusted at a quarterly business review three months later. Inbound interest from large companies, including major car manufacturers, also helped lower acquisition costs, which Matt estimated at around $2,500 per customer.
Paid search did not work well. Google AdWords cost about $10,000 and produced roughly 2,000 unqualified leads in one month, which consumed the team's time. Focusing on outbound enterprise sales and PR worked better. The company had only lost one client, so churn was still largely unknown.
As of the interview, Text had 65 enterprise clients and 13 team members, with plans to reach 15 soon. Matt was targeting $2 million in 2016 revenue, up from less than $1 million in 2015, and planned to raise a larger round in the following year.
- •Targeting large enterprises with a clear ROI story, rather than small businesses, allowed deal sizes to justify an outbound sales motion.
- •A repeatable inside sales hire producing two or three enterprise clients a month shows the model scales with headcount, which is what investors want to see.
- •Starting deals low and expanding at quarterly reviews turned initial customers into upsell revenue, supporting strong net revenue retention.
- •Dropping paid search after it produced unqualified leads shows the founder focused spend on channels that reached the right buyers.
- 1.Pick a painful, expensive problem in an incumbent channel (like phone support) and quantify the cost savings for enterprise buyers.
- 2.Land enterprise customers on a low-risk initial contract, then schedule a review about three months later to expand scope and price.
- 3.Hire inside sales reps and measure how many qualified enterprise clients each one brings in per month before scaling the team.
- 4.Test paid ads with a cap on spend and track lead quality; cut channels that produce volume without qualified buyers.
Similar Companies
247.ai
$25.0M/mo247.ai, founded by PV Cannon in 2000, is an AI-powered customer service automation platform serving over 150 enterprise customers with $300M+ in ARR. The company raised only $20M from Sequoia (2003) and bootstrap, achieving 10% net profit margins while maintaining a 12-month CAC payback period and 100% net revenue retention. Despite a security breach setback around 2018, 247.ai has recovered and recently achieved 20% new revenue booking growth in their best quarter.
iCIMS
$13.3M/moiCIMS is a bootstrapped SaaS provider founded in 1999 that dominates the talent acquisition software market as the #2 player, serving 3,500 enterprise customers with an average monthly spend of $4,000. The company exited 2017 with $160M ARR and is targeting 25%+ annual growth while maintaining profitability, recently acquiring Text Recruit to expand into candidate messaging and recruitment advertising.
Zoom
$12.0M/moZoom is a freemium SaaS video conferencing platform founded by Eric Yuan in July 2011 after he left Cisco to build a next-generation collaboration solution. The company has grown to 850,000+ paying customers across individual, SMB, and enterprise segments, generating over $12M in monthly recurring revenue with approximately 100% year-over-year growth. Rather than focusing on customer stickiness or aggressive growth targets, Zoom emphasizes customer happiness and organic word-of-mouth acquisition, which has proven highly effective in driving viral adoption.
Madwire
$10.0M/moMadwire is a comprehensive SaaS platform for small businesses (1-100 employees) that combines CRM, payments, invoicing, billing, e-commerce, and multi-channel marketing tools in a single platform. Founded in 2009, the company has grown to $120M ARR serving 20,000 customers with an average revenue per user of $500/month, while maintaining strong unit economics ($3,000-$4,000 CAC with 3-month payback) and recently turning profitable with a focus on reaching 15-20% EBITDA margins. The company is exploring an IPO within 12-18 months without having raised substantial capital beyond an initial $7.5M.
SwiftPage
$7.0M/moSwiftPage is a CRM and marketing automation platform founded in 2001 that targets small businesses. Under CEO John Oshel's leadership since 2012, the company scaled from 60,000 customers with $26.2M revenue in 2015 to 84,000 customers today with an estimated ARR of $36M+, maintaining 1.5% monthly logo churn and a 6-7 month payback period with a sub-$500 CAC.